2017 is looking like a good year for energy efficiency as investments grow

As the new year begins, we expect 2017 will bring increased investments in energy efficiency and other efforts to save energy.

The energy efficiency investment picture indicates that savings will continue to grow. Spending on energy-efficient goods and services as well as employment in energy efficiency jobs has increased in recent years, and these trends will likely continue. The International Energy Agency estimates that energy efficiency spending increased about 6% from 2014 to 2015, with 2015 spending totaling about $221 billion in major economies throughout the world (2016 figures not yet available). Similarly for the United States, BW Research in a report for the Department of Energy, found that 1.9 million Americans work full- or part-time energy efficiency jobs and that companies planned to hire another 260,000 energy efficiency workers in 2016. This job growth is spurred by a growing private sector focus on energy efficiency and strong policies, particularly at the state and local levels.

Federal policy forecast is less clear

With the Trump administration about to take office, some changes are likely at the federal level. Since the president-elect and his appointees have said little about energy efficiency, however, we do not have clear signals. As I wrote after the election, there may be opportunities for energy efficiency in an infrastructure package and as part of tax reform. On the other hand, there may be a need to defend existing federal energy efficiency policies and budgets if they come under attack. Budget issues will be debated by Congress in the spring (for the second half of the 2017 fiscal year) and summer and fall (for the 2018 fiscal year). A few energy efficiency regulations finalized by the Obama administration in recent months could be reconsidered by Congress this spring under the Congressional Review Act, a law that allows Congress to override recent regulations. However, there’s also a good chance that the limited Congressional floor time available for regulatory review will not be used for any energy efficiency regulations. Other legislative and regulatory actions will probably unfold gradually as the year progresses. They could roll back certain regulations or make it more difficult to issue new regulations. As the situation becomes clearer, I’ll write another blog post focused specifically on federal changes.

Progress likely in states, with some exceptions

While the situation in Washington DC is unclear, it is likely that many states will take energy efficiency actions. The Louisiana and Mississippi Public Service Commissions are holding proceedings on how best to expand utility energy efficiency programs from initial “quick start” programs to full-scale ones. Final action is expected in both states by the end of the year. Likewise, the North Carolina Utilities Commission is undertaking a proceeding on data access. Additional actions may also happen in the Tar Heel State as a new governor, Roy Cooper, takes office. Illinois and Michigan will be activity implementing new energy laws (including energy efficiency provisions) that passed in late 2016. Energy efficiency programs are likely to expand, perhaps starting in 2018. Delaware is also planning to expand energy efficiency programs based on legislation passed in 2014. Implementation has been moving slowly but will hopefully accelerate in 2017. On the other hand, while the Ohio legislature is interested in energy legislation, it wants to make energy efficiency programs voluntary for utilities. It passed a bill in late 2016 that Governor John Kasich vetoed. We expect further discussion in the Buckeye State in 2017. In 2015, Maryland established higher energy-saving targets for utilities, but appointees of Governor Larry Hogan have suggested they be scaled back. A coalition of energy efficiency supporters, including ACEEE, is organizing to oppose any rollback. For example, ACEEE will be releasing several reports on the energy savings as well as the job, economic development, and health benefits of the Maryland programs. Likewise, the Pennsylvania legislature has been considering legislation to allow large customers to opt-out of paying for energy efficiency programs. The legislation passed the Senate but not the House in 2016; it could come back in 2017.

Local energy efficiency efforts continue to be promising

Local energy efficiency activity is also growing, as shown in ACEEE’s State and Local Policy Database. For example last year, seven US cities passed energy benchmarking and transparency laws. We expect more cities to take advantage of the energy efficiency benefits of these policy changes in 2017. Energy efficiency is also making waves in real estate markets. The city of Portland, Oregon passed legislation that will allow homebuyers and sellers to compare the energy costs and performance of homes and to identify energy-saving home improvements. City-utility partnerships are increasingly important as cities work to reduce high household energy burdens and make energy more affordable for their communities. Detroit, Minneapolis, and Boston are good examples. We are now documenting many recent and pending actions for our 3rdCity Energy Efficiency Scorecard, which will be released in the spring (the 2nd scorecard can be found here).

Overall, we are expecting 2017 to be a generally good year for energy efficiency. While negative developments may occur at the federal level, state/local and private market activity are already driving large investments and could bring huge opportunities in the future.